Hollande Targets the Rich in a €7bn Tax Plan
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France’s Socialist president, Francois Hollande, has unveiled new tax rises worth 7.2 billion euros ($9 billion) that would mainly target the country’s wealthiest households and its biggest corporations. The announcement comes days after the French comptroller warned of gaping shortfalls in its national budget.
France’s Socialist president, Francois Hollande, has unveiled new tax rises worth 7.2 billion euros ($9 billion) that would mainly target the country’s wealthiest households and its biggest corporations. The announcement comes days after the French comptroller warned of gaping shortfalls in its national budget.
In the first major wave of economic measures since Hollande came into power in May, France will impose an extraordinary levy of 2.3 billion euros on wealthy households earning 1.3 million euros or more annually and 1.1 billion euros in one-off tax on large banks and oil companies.
The aim is to contain the budget deficit at 4.5 percent of gross domestic product this year, after the budget deficit came in at 5.2 percent last year.
The budget amendments, which also include tax increases on stock options and dividends, should easily receive approval by July 31st after the Socialist-led coalition won a comfortable majority at the elections last month.
Hollande has insisted that the rich must contribute and pay their fair share as France battles to trim its public debt to an EU statutory limit of 3 percent in 2013.
[quote] He had promised during his elections that “if there are sacrifices to be made – and there will be – then it will be for the wealthiest to make them.” [/quote]Related News: French Presidential Front-Runner Wants A 75 Percent Tax On The Rich
France has one of the highest state spending levels in the world, and its spending habits saw its public debt soar by 800 billion euros in the last 10 years to 1.8 trillion euros – equivalent to 90 percent of its GDP.
Earlier this week, state auditors had warned of a 43 billion euros gap in state coffers, and on Tuesday, the government was forced to reduce its forecast on economic growth to 0.3 percent this year.
Related News: France Turns to Budget Cuts to Meet Deficit Targets
The dramatic action by Hollande has inevitably led to comparison with his predecessor Nicolas Sarkozy.
Nicholas Spiro, of Spiro Sovereign Strategy, told Reuters:
[quote] There’s a sharp break, politically and to a lesser extent economically, with Mr Sarkozy’s more business-friendly fiscal policies. [/quote]
Laurence Parisot, chief of Medef, the largest union of employers in France, said that is unfortunate to “see an increase in corporate taxes at a time when they need to be lowered, as the only way to make our economy more competitive.”
According to officials, the one-off increase in wealth taxes will affect over 300,000 households in France.
Related News: French Billionaires Call For Higher Taxes
